Business development services- (BDS)
“Business development services” (BDS) refer to services, such as advice, training, consultancy and mentoring, aimed at upgrading the managerial skills and business practices of SME managers. There is good evidence that BDS does improve SME performance through productivity growth and access to new markets (Piza et al., 2016; Cravo and Piza, 2019). BDS can include advice, training, consultancy and mentoring on various aspects of starting and operating a business. BDS markets are the systems through which BDS are delivered to SMEs by different providers, such as public agencies, private firms, or non-profit organisations. . BDS markets can vary in their level of development, quality, and accessibility across services and countries.
As Vietnamese companies become more involved in the global market, they have increased their need for BDS to improve their businesses. Even though many Vietnamese entrepreneurs like to deal with their own problems (Edwards and Phan, 2013), getting certified to join global supply chains requires them to seek external BDS. However, BDS are not easy to find locally and many SMEs do not know about them or their benefits. The concentration of BDS providers, especially private ones, in big cities, may help urban SMEs grow, but also widen the gap between regions.
Designing a low-cost scheme reaching a wide range of SMEs
Low-cost services and to target policy
To reach more SMEs with low-cost services and to target policy where the market is weak, i.e. the neglected markets, there are two main steps. First, a cheaper service that can serve many more SMEs is needed. SME web portals with online tools, interactive training, and “virtual” advisors are a common “low cost, high reach” method of governments in OECD countries. In Viet Nam, the National SME Support Portal could be improved to become the main source of information, knowledge, guidance and resources for entrepreneurs and SMEs. BPO.MP could do this, for example:
- Providing more information and guidance to SMEs on how to start and grow a business.
- Using content and tools from other Vietnamese organisations’ websites.
- Offering more learning opportunities for entrepreneurs by creating interactive training modules
- Making the online database of approved consultants more useful, by showing their expertise and matching it with the available subsidised consultancy services
- Creating a virtual “question and answer” window for entrepreneurs to ask their questions and get an answer quickly.
Supporting neglected BDS markets in Viet Nam’s remote regions is a continuing problem. Remote areas are less appealing for BDS providers because they are not only harder to access, but they also have fewer firms and more firms in less productive sectors than cities (Johansson and Klaesson, 2011). Therefore, BDS markets in these regions are less likely to be self-sustaining. Given these factors, fully-funded or subsidised BDS schemes are very important. Experience from BDS actors in big cities, such as the Ha Noi SME Association, is useful to SMEs in less central areas, especially in transferring skills and providing protected funds for BDS. The National SME Support Portal is part of the solution to helping SMEs in non-urban areas, if they have Internet access. Other options to consider to reach these markets are working with local SME associations, using virtual counselling or coaching sessions, and running a Mobile BDS Clinic that visits remote locations regularly.
Second, focusing on cost-recovery from BDS programmes for SMEs would lower net costs. Evidence from experimental studies shows that beneficiaries pay more attention to advice that costs them personally (Gino, 2008). A voucher scheme would mostly fit in the cost-recovery approach. Vouchers allow firms to use the subsidy as a one-time trial for a business support service, realise its value and be more willing to pay full costs later. Thus, the BDS development framework should include using a voucher scheme to cover part of the cost of getting a BDS service.
The context in Viet Nam
While the context in Viet Nam is favourable for BDS development, there are still a number of weaknesses in the national BDS ecosystem. The delivery of BDS support is dispersed across a variety of organisational actors – central and provincial government bodies, business associations, and private sector consultancy firms – each functioning separately from the others, providing various forms of BDS support, with limited opportunities to exchange experience or collaborate. There is currently no mechanism for inter-institutional co-ordination of the BDS activities. Such a mechanism would help greatly in reducing the fragmentation of BDS support and its delivery across the country, increasing efficiencies, and filling gaps in service offerings. The AED should seek to achieve a greater level of inter-institutional co-ordination in the area of SME support and, specifically, in the provision of BDS. The MPI-AED should also continue the partnership to build on the Ha Noi and Ho Chi Minh City pilot project with a view to replicating the “comprehensive BDS support system” and collaborative network of BDS providers in other provinces of Viet Nam.